tag:blogger.com,1999:blog-38295992020-06-03T23:16:36.958-07:00AgoraphiliaThe Center for Blurbs in the Public InterestUnknownnoreply@blogger.comBlogger1668125tag:blogger.com,1999:blog-3829599.post-44164272484638640162014-07-03T06:23:00.001-07:002014-07-03T06:23:30.724-07:00Economics of the Undead: Book and BlogIs anyone still checking this blog in the hope that I might start blogging again? If so, you're in luck! To publicize my new book, <a href="http://www.amazon.com/Economics-Undead-Zombies-Vampires-Science/dp/1442235020/">Economics of the Undead</a> (co-edited with James Dow and featuring chapters written by 20+ other authors), I have created an <a href="http://econundead.com/">Economics of the Undead website</a>. In addition to the book's table of contents, chapter excerpts, and a course guide, there's also a <a href="http://econundead.com/blog/">blog</a> featuring posts with the latest econ-undead news and commentary. The book's official publication date is July 11, but you can pre-order now. And, if you would be so kind, like/tweet/share/follow/pimp the book and blog to anyone you think might appreciate them! Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3829599.post-75305785812230384872013-09-13T14:22:00.000-07:002013-09-13T14:22:14.363-07:00Breaking Bad and the Healthcare SystemThere’s a meme floating around that the storyline of <em>Breaking Bad</em> constitutes a scathing indictment of the U.S. healthcare system. The latest entry is <a href=http://dangerousminds.net/comments/if_breaking_bad_was_set_in_the_uk_it_would_be_entirely_different_story>this comic strip</a>, which says that if <em>Breaking Bad</em> had been set in the U.K., it would be an “entirely different story” – one that ends in just 5 panels. But it’s not just comic strips. <a href=http://www.dailykos.com/story/2013/08/26/1233904/--Breaking-Bad-Displays-Brutality-of-American-Private-Health-Insurance-Non-System#>Daily Kos</a> says that <em>Breaking Bad</em> “Displays [the] Brutality of American Private Health Insurance Non-System,” while Tricia Romano at the <a href=http://www.thedailybeast.com/articles/2013/08/27/breaking-bad-is-fully-dependent-on-our-broken-health-care-system.html>Daily Beast</a> says the show “Is Fully Dependent on Our Broken Health-Care System.” There are probably other examples.<br /><br />The problem with this claim isn’t that the U.S. healthcare system is actually wonderful. It’s not. The problem is that it’s just not consistent with the actual TV show. I can verify this because I’ve rewatched the whole first season (and much of the second) over the last couple of weeks. <br /><br />Walter White makes his first foray into the meth business before health expenditures are even mentioned. Walter does have insurance coverage, and his HMO will cover his cancer treatment. It’s true that Walter mentions that his HMO isn’t very good at some point, but that’s as far as it goes. As it turns out, Walter doesn’t even intend to endure the treatment (as revealed a few episodes later in “Cancer Man”). It’s very clear that Walter’s overriding goal is to leave a nest egg for his wife, disabled son, and unborn baby.<br /><br />Eventually, health costs do become an issue when Skyler pressures Walter to undergo treatment after all. But it’s not because his HMO won’t pay. It’s because Skyler finds an oncologist who is not just one of the best in Albuquerque, but one of the top 10 oncologists in the nation. It turns out this super-doctor with his fancy cancer treatment is not covered by the HMO, and the out-of-pocket price is $90,000. Some will say that’s the smoking gun that indicts the U.S. healthcare system. But there is no system <em>in the world</em> that offers high-end care to everyone. The vaunted U.K. and Canadian systems offer care to every citizen, but they don’t offer the <em>best</em> care to every citizen. That’s just not possible. A single-payer system is essentially a giant public HMO, and just like private HMOs, they sometimes deny treatment or (more relevant here) deny the highest-quality treatments. Citizens who aren’t happy with the coverage provided by the government system have to pay for it themselves, either through supplementary private insurance or out of pocket. Sometimes they even travel to foreign countries, like the U.S., for that care. <br /><br />To reiterate: Walter White has health insurance, and it would have covered his cancer treatment. The only reason Walter needs so much money for medical bills is because he opts out of his insurance coverage in favor of higher-quality, more expensive treatment. And even then, it’s clear this isn’t Walter’s only motivation. In the episode “Seven Thirty-Seven,” Walter calculates how much he needs to sock away, and he comes up with $737,000, <em>not</em> just the $90,000 for the cancer treatment. This is a story that could have been told in many countries, including both the U.K. and Canada. <br /><br />I’m not saying we can’t imagine a version of <em>Breaking Bad</em> that does condemn the U.S. healthcare system. For instance, they could have had Walter lose his job, and his health insurance with it, right before getting his cancer diagnosis. Less plausibly, they could’ve had his deductible and copayments be so large that he has to cook meth to pay them. (I say “less plausibly” because while those sums can be large, they’re probably not large enough to explain Walter White’s extreme actions.)<br /><br />But <em>Breaking Bad</em> did not choose either of these routes. In fact, the show often goes out of its way to show that ultimately it’s not really about money at all for Walter; it’s about pride. Pride is why he didn’t want to have treatment in the first place. When his former colleague Elliot Schwartz offers to pay for Walter’s non-covered cancer treatment, it’s pride that makes Walter say no. And pride is why Walter continues to cook meth long after he’s achieved his monetary goals. Blaming the events of Walter White’s life on the U.S. healthcare system isn’t just wrong; it’s missing the entire point of the show.Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-3829599.post-39036302073596808422013-08-05T14:58:00.001-07:002013-08-05T14:58:07.365-07:00Meat-Without-Feet and Animal UtilitarianismEveryone’s talking about the <a href=http://reason.com/blog/2013/08/05/petri-dish-burger-is-totally-real-tastes>lab-grown meat burger</a>. I’ve been expecting this for years, and I think it’s extremely cool. I love me some science, and I’d totally give the burger a try. But let’s suppose the technology improves and the price drops enough for meat-without-feet to displace traditional beef. Is this clearly a good thing for the cows?<br /><br />I don’t think there’s a clear answer; instead, it depends on a rather obscure philosophical question. For simplicity, let’s say we believe in animal-utilitarianism. We want to maximize the happiness (or utility) of the cows. But what are we trying to maximize, the <em>average</em> utility or <em>total</em> utility? The answer matters, because a widespread conversion to lab-grown meat would drastically reduce the number of cows being raised around the world. <br /><br />If you’re interested in average utility, then the answer is probably yes. Let’s assume the few cows remaining are treated like kings. In that case, average happiness per cow will be very high. <br /><br />But is average utilitarianism plausible? Average utilitarianism has some bizarre implications, not the least of which is <em>opposition to adding new creatures with utility that is positive but below the average</em>. If you currently have just one cow living like a king (utility of 100), and you add one more cow who lives like an earl (utility of 50), the average utility drops to 75. From an average-utilitarian perspective, you should oppose the creation of this new cow. Which is weird, because it seems like living like an earl – or even substantially worse than an earl – should be fine. I’d rather be a living pauper than not living at all.<br /><br />Okay, so suppose we’re interested in total utility. In that case, it’s not clear whether the advent of lab-grown meat is good for the cows. If we suppose (as some animal rights activists would have us believe) that the life of a typical cow in the status quo is worse that death – that is, it has <em>negative</em> utility – then it would be better for the species to go extinct than continue as it is. But I’m doubtful that the life of a typical cow really has negative utility; I think it’s probably very low but positive. And if it’s not positive, it could be if we all switched to consuming free-range instead of factory cattle. If cattle do have lives with low-but-positive utility, then a mass conversion to lab-grown beef would certainly reduce the total utility of the cow population. <br /><br />But total utilitarianism has problems, too, the most important being that it plausibly falls prey to Derek Parfit’s “<a href=http://agoraphilia.blogspot.com/2006/05/deontology-meets-mere-addition-paradox.html>repugnant conclusion</a>”: that the best possible outcome is a maximally-sized population living lives just barely worth living. <br /><br />So which should we support, average or total? Sadly, philosophy offers no clear answer. Both positions leads to some strange conclusions. David Friedman has offered a kind of “third way” between these two flavors of utilitarianism (based on what economists call a “partial ordering”), but I never really understood his solution intuitively. Some people would reject utilitarianism entirely, which may be plausible for humans, but for animals it’s hard to think of any reasonable alternative. (The vegetarian-libertarian Robert Nozick famously supported “natural rights for humans, utilitarianism for animals.”) Personally, I lean toward an ill-defined compromise of sorts between average and total utilitarianism, but I don’t claim to have any coherent definition – let alone a defense – of this position. <br /><br />In any case, I think you have to conclude that lab-grown meat is not obviously superior to a continued reliance on traditional meat, even from the perspective of the cows themselves. To the extent you place any weight at all on the total number of cows, any large-scale reduction in demand for beef potentially raises serious concerns. Incidentally, the same logic applies to a widespread adoption of no-lab-meat vegetarianism as well. <br />Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-3829599.post-88417122472188394702013-03-09T10:19:00.001-08:002013-03-09T10:19:42.931-08:00Marginal Utility Theory of Daylight Saving TimeI just posted this on Facebook, and I thought I might as well post it here as well. <br /><br />This is the marginal utility theory of Daylight Saving Time. If you could, you would allocate your daylight according to marginal utility -- starting with the most valuable hour to have daylight, then the second most valuable hour to have daylight, and so on. Suppose, as seems to true for many people, that your ordering (from most to least valuable) is something like this: The hours you want lit the most are from 7am-5pm. (Don't worry about the ordering of preferences within that period, because you'll get that much daylight even in the dead of winter, at least where I live.) Next, you'd like some daylight in the evening, after 5pm. And least important are the early morning hours, before 7am.<br /><br />Under standard time, you've got your first period (7am-5pm) covered even in winter (at least where I live, Los Angeles). But as the daylight hours get longer, they are distributed approximately equally on both sides of that time period. This is inconsistent with your preference ordering, because you'd rather get the added daylight on the evening side. By mid-March, you've added a full hour in the morning (6am-7am) and full hour in the evening (5pm-6pm). But you'd much rather have had both hours in the evening (5pm-7pm). Switching to DST accomplishes this. And it does a similar thing the rest of the summer, although the specific hours swapped change.<br /><br />But in that case, why not have DST year-round? Because if you did, then in the dead of winter you'd have daylight from 8am to 6pm. That means you'd be getting a less-valued hour of daylight, 5pm-6pm, instead of the more-valued hour from 7am-8am.<br /><br />In other words, the order in which nature provides us with added hours of sun doesn't match our preferred ordering. Nature adds hours in a symmetric fashion, while our preferences order them asymmetrically, wanting to add more in the evening before we add more in the morning.<br /><br />And in case you're wondering: yes, this scheme does imply that we might want to have Daylight SUPER Saving Time in mid-summer, so that we could trade an hour of daylight at 4am (useless!) for an hour at 9pm (awesome!). But given how much people bitch about changing over twice a year, the adjustment costs of four+ times a year would be too great.Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-3829599.post-16857253500819495632013-03-08T10:58:00.000-08:002013-04-02T17:57:53.076-07:00Economics of the Undead: Call for AbstractsAnyone wondering what kind of projects have been keeping me from blogging lately? Well, here's one...<br /><br /><center><b>Call for Abstracts<br /><br /><i>Economics of the Undead: Blood, Brains & Benjamins</i><br /><br />Glen Whitman & James P. Dow, Editors</b></center><br />The editors seek abstracts for essays exploring the relationship between economics and the undead, especially zombies and vampires. The chosen essays will appear in a collection to be published by Rowman & Littlefield. <br /><br />Ideal contributions will use economic reasoning to address issues related to the undead, use the undead as a means of exploring economic thought, or both. Abstracts and final essays should be written in an accessible and engaging style for a popular audience. Contributions should also make relevant reference to the undead in pop culture, such as the Twilight saga, Buffy the Vampire Slayer, the novels of Anne Rice, World War Z, the films of George Romero, True Blood, and The Walking Dead. <br /><br />Possible topics include: supply and demand in the market for blood; the operation of zombie labor markets; the political economy of responding to undead threats; macroeconomic recovery after a zombie apocalypse; what zombie and vampire behavior tell us about rational-choice modeling; etc. <br /><br />Submission Guidelines:<br /><br />1. Send abstract of paper (100-500 words) in Word or compatible format.<br />2. Include resumé/CV for each author.<br />3. Submit by email to both glen.whitman@gmail.com and jpdow@verizon.net.<br />4. Submission deadline is <strike>7 April 2013</strike> 21 April 2013. <br />5. For accepted abstracts, first drafts of essays will be due 15 July 2013. <br /><br />Feel free to forward this to anyone with economics training or experience who might be interested in contributing. Although we are only asking for abstracts at this time, if you have already written an unpublished article that fits the subject matter, you may submit the article in its entirely. <br />Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3829599.post-20371258638610767622012-12-12T10:13:00.000-08:002012-12-12T10:15:29.963-08:00CFTC Targets Prediction Markets; Hits First AmendmentWould you pay good money for accurate predictions about important events, such as election results or military campaigns? Not if the U.S. Commodity Futures Trading Commission (CFTC) has its way. It recently took <a href="http://www.cftc.gov/PressRoom/PressReleases/pr6423-12">enforcement action</a> against overseas prediction markets run by InTrade and TEN. The alleged offense? Allowing Americans to trade on claims about future events.<br /><br />The blunt version: If you want to put your money where your mouth is, the CFTC wants to shut you up.<br /><br />A prediction market allows its participants to buy and sell claims payable upon the occurrence of some future event, such as an election or Supreme Court opinion. Because they align incentives with accuracy and tap the wisdom of crowds, prediction markets offer useful information about future events. <a href="http://www.intrade.com/v4/home/">InTrade,</a> for instance, accurately called the recent U.S. presidential vote in all but one state.<br /><br />As far as the CFTC is concerned, people buying and selling claims about political futures deserve the same treatment as people buying and selling claims about pork futures: Heavy regulations, enforcement actions, and bans. Co-authors Josh Blackman, Miriam A. Cherry, and I described in <a href="http://www.chron.com/opinion/outlook/article/Cutting-access-to-InTrade-violates-Americans-4100729.php">this recent op-ed</a> why the CFTC’s animosity to prediction markets threatens the First Amendment.<br /><br />&nbsp;The CFTC has already managed to scare would-be entrepreneurs away from trying to run real-money prediction markets in the U.S. Now it threatens overseas markets. With luck, the Internet will render the CFTC's censorship futile, saving the marketplace in ideas from the politics of ignorance.<br /><br />Why take chances, though? I suggest two policies to protect prediction markets and the honest talk they host. First, the CFTC should implement the policies described in the jointly authored <em>Comment on CFTC Concept Release on the Appropriate Regulatory Treatment of Event Contracts</em>, July 6, 2008. (Aside to CFTC: Your web-based copy appears to have disappeared. Ask me for a copy.)&nbsp; <br /><br />Second, real-money public prediction markets should make clear that they fall outside the CFTC's jurisdiction by deploying notices, setting up independent contractor relations with traders, and dealing in negotiable conditional notes. For details, see <a href="http://www.tomwbell.com/writings.html#gambling">these papers</a> starting with <a href="http://www.tomwbell.com/writings/PrivatePMs&amp;theLaw.pdf">this one.</a><br /><br />[Aside to Jerry and Adam: Per my promise.]<br /><br />[Crossposted at <a href="http://techliberation.com/">Technology Liberation Front,</a> and <a href="http://agoraphilia.blogspot.com/">Agoraphilia.</a>]<BR>Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com4tag:blogger.com,1999:blog-3829599.post-15656488987276220522012-11-27T15:56:00.000-08:002012-11-27T15:56:21.754-08:00The Freeman on Free Cities<span id="fullpost">The Foundation for Economic Education recently invited me to join its flagship publication, <STRONG>The Freeman,</STRONG> as a regular contributor. It just published my first article, <A HREF=http://www.fee.org/the_freeman/detail/no-exit-are-honduran-free-cities-doa><EM>No Exit: Are Honduran Free Cities DOA?</EM></A> Here's an excerpt: <BR><BLOCKQUOTE> Eager to bring Hong Kong-style growth to their beleaguered Central American country, Honduras amended its constitution in 2011. The new provisions allowed the creation of quasi-sovereign special development regions. Libertarians thrilled at the prospect. <BR><BR>By making it easier to escape from bad government to better government, the Honduran plan would put the forces of competition and choice in the service of the Honduran people. Formerly, Hondurans who voted with their feet had to flee their homeland. Now, they could stay and wait for good government to come to them--at least to the neighborhood. <BR><BR>Those grand visions came to nothing, however. Instead, the Honduran Supreme Court struck down the constitutional amendments as ... unconstitutional. Does that spell the end of the Honduran experiment in newer, freer cities? </BLOCKQUOTE></span>Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com3tag:blogger.com,1999:blog-3829599.post-13004403245617827862012-11-05T09:05:00.000-08:002012-11-06T08:54:22.132-08:00To My Fellow Libertarian VotersI plan to vote on Tuesday, for the same reasons I enunciated <a href=http://agoraphilia.blogspot.com/2004/08/libertarian-case-against-non-voting.html>eight years ago</a>. Nevertheless, I respect the position of libertarians who choose not to vote on grounds of principle (“the whole system is corrupt and I refuse to take part”) or rational cost-benefit analysis (“my vote won’t make a difference, and I might get hit by a truck on the way to polls”). So libertarian non-voters, I’m not talking to you right now. <br /><br />I’m talking to the libertarians who do vote. To be more specific, I’m talking to libertarians who have found some reason to think that one of the major party candidates is the lesser of two evils. I respect that, too. Even though your vote won’t <em>really</em> swing the election to your favored candidate, taking part in the democratic process often means exaggerating the importance of your vote. Personally, I like to imagine that I represent all similarly situated people with similar beliefs, and then I vote the way I’d like to see the whole group vote.<br /><br />Thus, if I were in a swing state where <em>conceivably</em> a group of libertarian-minded voters could affect the outcome if they all voted together, I would hold my nose and vote for one of the two major party candidates. <br /><br />According to the <a href=http://elections.nytimes.com/2012/electoral-map>New York Times electoral map</a>, only 7 states are considered “toss-ups”: CO, FL, IA, NH, OH, VA, WI. To these, you might add the 8 “leaning” states: ME, MI, MN, NM, NV, PA (for Obama), AZ and NC (for Romney). If you’re a libertarian voter in one of these 15 states, then I have nothing useful to tell you.<br /><br />But that leaves 35 states that are solidly in the Democratic or Republican camp, with a combined eligible-voter population of over 136 million (about half that number voted in 2008). None of these states would <em>by any stretch of the imagination</em> get tipped by your vote-of-exaggerated-size. In these states, there is no good reason to vote for Obama or Romney. You can vote your conscience with no fear that your conscience will have doomed our country to the greater of two evils. <br /><br />And fortunately, there is an excellent vote-of-conscience choice available this year: Gary Johnson. Imagine if everyone like us (that is, libertarians in non-swing states) voted for Johnson. If even 1% of voters were in this category, Johnson would get over a million votes -- which might actually be enough to get some attention, and maybe establish a beachhead for another run in 2016. <br /><br />Okay, that probably won’t happen. But your vote was never going to make a difference anyway. Not anywhere, in truth, but <em>certainly</em> not in a non-swing state. So why not vote for the only candidate who comes even close to representing your beliefs? Vote for Johnson.<br /><br />UPDATE (11/6/12): To clarify, I have no particular love for the Libertarian Party, and my argument is not about setting up the LP for future elections. It's about setting up Gary Johnson for another run in 2016, whether as a Libertarian, Republican, or Independent. And it's also about casting a vote of conscience, irrespective of consequences. Unknownnoreply@blogger.com8tag:blogger.com,1999:blog-3829599.post-56713411058881454832012-07-27T14:30:00.000-07:002012-07-27T14:35:50.131-07:00Grace in the Face of ChangeI just learned today that the Laemmle Sunset 5, a theater famous for showing independent films, shut down late last year. The theater's <a href="http://www.laemmle.com/viewtheatre.php?thid=2">website</a> explains the theater's demise:<blockquote>Eventually, new multiplexes such as the Arclight and the Grove opened nearby and began nabbing the artful specialty films that had long been the Sunset 5’s exclusive domain.</blockquote>When a small business closes in the face of competition from larger firms, it's common to hear complaints about the capitalist system -- along with calls for subsidies or government protection (such as having the location designated a "historical landmark"). So I was pleasantly surprised to read the next line:<blockquote>Such is the forward motion of time and commerce.</blockquote>I appreciate and respect the owners' choice to accept the theater's fate with equanimity.<br /><br />For those worried about the lack of venues for independent films, two things: First, as the quote above indicates, the Arclight and Grove theaters were able to squeeze out the Laemmle Sunset 5 in part <em>because</em> they offered independent fare in addition to the usual major-studio movies. And second, the Sunset 5 <a href="http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/laemmle-theatres-sunset-5-sundance.html">has been acquired by Robert Redford's Sundance Cinemas</a>, which is currently renovating the theater. As Tom Bernard, co-president of Sony Pictures Classics, says in the linked article: "Maybe fresh blood will bring new life into the theater and come new cash too. A face lift on the theater may attract new audiences and make it a place to be." Only time will tell.<br /><br />UPDATE (added immediately after posting): Before anybody says it, I should point out that the Laemmle family will do just fine. They have other theaters, including new ones opening elsewhere in the L.A. area. Obviously, it would be harder for someone who owned only one location to greet the news with such equanimity. Nevertheless, I respect how the Laemmles responded. Moreover, the usual calls for subsidy and protection don't just come from the small business owners, but from people who have an interest in the business, including suppliers (like indie producers) and devoted customers. I'm pleased that apparently didn't happen here.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3829599.post-71038170124949841042012-07-26T09:34:00.000-07:002012-07-26T09:34:27.849-07:00Penn State's Punishment and Social FactsMy father sent the following email to a group of family and friends:<blockquote>Penn State’s NCAA Punishment:<blockquote>1. A fine of $60 million, which is approximately equal to the (past) annual gross revenue of the football program.<br /><br />2. A four-year ban from postseason play; thus, Penn State will not be allowed to share in the conference’s bowl revenue, an estimated loss of about $13 million a year.<br /><br />3. A cut in the number of football scholarships it can award each year.<br /><br />4. The NCAA also erased 14 years of Penn State victories, wiping out 111 of Paterno’s wins and stripping him of his standing as the most successful coach in the history of big-time college football. Former Florida State coach Bobby Bowden, with 377 major-college victories, will replace Paterno, while Paterno will be credited with 298 instead of 409.</blockquote>I don’t get #4. How do you change history? What about all the former players and spectators who know what actually happened, and what about all the newspaper and TV archives that attest to what actually happened? How is the NCAA going to change all that? It makes no sense to me.</blockquote>Two of my father’s friends replied. One of them, JAB, argued that punishment #4 was an attempt to impose “a punishment that hits them in a place other than the wallet,” which was needed in order to send a message that all those wins are less important than honor and integrity. The other, Mike, said that history is changed all the time; as an example, he offered a story in which a company accidentally pays an employee $100,000 when it should have paid him $10,000, and then takes back $90,000 after noticing the error.<br /><br />Here is how I responded:<span id="fullpost"><blockquote>I don’t think JAB and Mike’s responses to my dad’s question are sufficient.<br /><br />With respect to JAB’s point, no one is disputing the NCAA’s motivation. They want to punish Penn State for bad behavior, and clearly there are ways they can do it (see items #1-3). The question is whether the NCAA has the ability to change history. History is what it is. If you committed murder, could the government punish you by changing your birthday? Of course not; your birth happened on a particular day. They could <em>pretend</em> it happened on a different day, or not at all, but that wouldn’t change the fact.<br /><br />With respect to Mike’s point, it shows that it’s possible to <em>remedy</em> past events, but not to change them. In his example, you were still paid $100,000 in the month of February, period. The mistake was made, and the money appeared in your bank account. The subsequent take-back fixes the mistake, but it does not change history.<br /><br />I would add to Dad’s point that trying to change history creates historical anomalies and contradictions. If Penn State didn’t win a particular playoff game, that implies that its opponent must have won. But then why didn’t that opponent appear in the subsequent playoff game? (Not being a follower of college football, I realize that “playoff” might be the wrong word, and the structure for determining champions isn’t like the NFL’s bracket structure. But you see my point.)<br /><br />If I were to defend NCAA’s punishment #4, my defense would rely on the notion of a “social fact.” Some facts are true by the nature of physics, chemistry, etc., and therefore do not change based on human desire or behavior -- such as that the earth orbits around the sun. But social facts are different. They are true based on human conventions and values that define them as such. For instance, there is no “cosmic truth” about who won a game of chess. Rather, who won the game is a function of a set of rules for play, and those rules were invented by humans. Likewise, whether Philip and Elaine [my parents] are married is a matter of social convention -- what we as a society regard to be necessary and sufficient conditions for marriage.<br /><br />In the case of college football, what NCAA is basically saying is that a “win” isn’t what you think it is. You may have thought that a “win” meant scoring a larger number of points by means of touchdowns, field goals, etc. (and of course, all those things are social facts as well). But NCAA is saying that, in an NCAA-qualified game, a “win” means both scoring a larger number of points within the game <em>and</em> abiding by certain standards outside the game. Thus, it is possible to decide or discover, retroactively, that what seemed to be a win was not. In short, NCAA claims the right to define the social facts within its sphere of control.<br /><br />However, it would also be valid for someone (like Dad) to respond thus: “Okay, fine, you can define ‘win’ however you want for NCAA purposes. But you can’t redefine ‘win’ for the general public. The general public understands ‘win’ in terms of the conventional rules of football. And by those rules, it’s a fact that Penn State won all those games, and NCAA is powerless to change that.”<br /><br />I leave it as an exercise to apply this lesson to the question of who won the 2000 election.</blockquote>Incidentally, my brother Neal independently wondered the same thing my dad did. He tweeted:<blockquote>Hey, I just learned Texas A&M won the Alamo Bowl in 1999 & 2007! Maybe some of my TX friends can get me the commemorative T-shirts...</blockquote>Maybe some enterprising person will now start making them.<br /></span>Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-3829599.post-73490837071847891072012-07-10T10:08:00.000-07:002012-07-10T10:09:29.650-07:00Partisan Statistic AlertSome people are touting <a href="http://soupsoup.tumblr.com/post/8952097873/debt-increase-by-presidents-reagan-186-bush-54">the statistics reported here</a>, which show that the national debt has increased by a smaller percentage under Obama than the four previous presidents.<br /><blockquote>Reagan - 189% Bush - 55% Clinton - 37% Bush - 86% Obama - 35%</blockquote>I double-checked the numbers, and they are technically correct. But they’re also meaningless.<br /><br />First, these figures compare <i>presidents</i> instead of <i>presidential terms</i>. It shouldn’t be surprising that a two-term president will tend to rack up more debt than a one-term president.<br /><br />Second, this is one of those instances where percentages are completely misleading. Each administration inherits the debt built up by all previous administrations, and that inherited debt provides the denominator for calculating the percentage increase. As a result, the percentage is automatically pulled downward for later presidents simply because they are later.<br /><br />(For comparison, imagine if the entire $14.9 trillion in debt accumulated since 1980 had been added in equal-sized chunks by all eight presidential terms. That would be $1.87 trillion per term. Yet the percentages wouldn’t be equal at all. They would decline in every single year, from a high of 201% for Reagan 1 to a low of 13% for Obama.)<br /><br />So what happens when we correct for both errors? Correcting the term problem first, and also adjusting dollars for inflation (something else I don’t think the original source did), here are the percentage increases by presidential term:<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-5xwnhdQANVA/T_xgXcU_2WI/AAAAAAAAAQo/sUP1jGG0cLA/s1600/pct_inc_natl_debt.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="262" src="http://3.bp.blogspot.com/-5xwnhdQANVA/T_xgXcU_2WI/AAAAAAAAAQo/sUP1jGG0cLA/s400/pct_inc_natl_debt.jpg" width="400" /></a></div><br />Now Obama’s record isn’t the best. He has the third highest percentage increase, and he hasn’t even finished his term yet. (I used the most recent national debt figures, which you can find <a href="http://www.treasurydirect.gov/NP/BPDLogin?application=np">here</a>. For pre-1993 figures, see <a href="http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm">here</a>.)<br /><br />But again, the percentage is misleading. It would be better to look at the absolute dollar increase (again, adjusted for inflation). Here’s what you get:<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-Mq_cViU2cjM/T_xggBkOxLI/AAAAAAAAAQ0/m4OOyHfQJjs/s1600/abs_inc_natl_debt.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="263" src="http://1.bp.blogspot.com/-Mq_cViU2cjM/T_xggBkOxLI/AAAAAAAAAQ0/m4OOyHfQJjs/s400/abs_inc_natl_debt.jpg" width="400" /></a></div><br />Now it becomes clear: Compared to the previous seven presidential terms, Obama has presided over the largest increase in the national debt. And again, his term isn’t over yet. <br /><br />Obviously, Obama’s defenders will say his actions were justified. He inherited a terrible economy, a large stimulus was necessary to boost performance, some expenditure increases were outside Obama’s control, etc. Those arguments might even be right, and they’re free to make them… but only after admitting that the national debt did, in fact, increase dramatically during Obama’s term. <br /><br />One final addendum: these numbers could, of course, be adjusted in many other ways as well. You could adjust for the size of GDP or population. You could change the start-and-end dates to reflect who passed the relevant budgets, or to reflect that a presidential term doesn’t start until about a month after the election; doing so would shift some of Obama’s debt into Bush II’s second term (as well as shorten Obama’s effective time in office). In truth, there’s something inherently silly about trying to attribute changes in the national debt to specific presidents at all, since additional debt results from a complex interplay of policies created by multiple presidents and congresses over time. All I’m really trying to correct here is two very obvious errors that the creators of these particular statistics should have seen instantly, and probably would have seen if they didn’t have partisan blinders on. <br /><br />Unknownnoreply@blogger.com13tag:blogger.com,1999:blog-3829599.post-82303064579545550022012-06-12T16:15:00.000-07:002012-06-12T16:20:17.752-07:00Accuracy of Model of the 2013 USN&WR Law School Rankings<span id="fullpost"> As in every year since 2005, I’ve again built a model of the U.S. News & World Report ("USN&WR") law school rankings. This latest effort generated a record-high r-squared coefficient: .998673. More about what that means—and more about the one law school that doesn’t fit—below. First, here’s a snapshot comparison of the scores of the most recent (USN&WR calls them “2013”) law school rankings and the model:<br /><br /> <a href="http://2.bp.blogspot.com/-93qrX7mNZFs/T9Z22nwTBgI/AAAAAAAABCM/vsEVdrKRzwU/s1600/USNews%252713ModelAccuracy.gif" imageanchor="1" style="margin-left:1em; margin-right:1em"><img border="0" height="309" width="400" src="http://2.bp.blogspot.com/-93qrX7mNZFs/T9Z22nwTBgI/AAAAAAAABCM/vsEVdrKRzwU/s400/USNews%252713ModelAccuracy.gif" /></a> <br /><br />As that graphical comparison indicates, the model replicated USN&WR’s scores very closely. Indeed, the chart arguably overstates the differences between the two sets of scores because it shows <EM>precise</EM> scores for the model but scores <EM>rounded to the nearest one</EM> for USN&WR.<br /><br />As I mentioned above, comparing the two data sets generates an <A HREF=http://en.wikipedia.org/wiki/Pearson_product-moment_correlation_coefficient>r-squared</A> coefficient of .998673. That comes very close to an r-squared of 1, which would show perfect correlation between the two sets of scores. Plainly, the model tracks the USN&WR law school rankings very closely.<br /><br />In most cases, rounding to the nearest one, the model generated the same scores as those published by USN&WR. In four cases, the scores varied by 1 point. That’s not enough of a difference to fuss over, given that small variations inevitably arise from comparing the generated scores with the published, rounded ones. Consider, for instance, that USN&WR <EM>might have</EM> generated a score of 87.444 for the University of Virginia School of Law and published it as “87.” The model calculates Virginia’s score in the 2013 rankings as 88.009. The rounded and calculated scores differ by 1.009. But if we could compare the original USN&WR score with the model’s score would get difference of only .565 points. I won’t worry over so small a difference.<br /><br />You know what does worry me, though? Look at the far right side of the chart above. That red “V” marks the 4.48 difference between the 34 points USN&WR gave to the University of Idaho School of Law and the score that the model generated. Idaho showed a similar anomaly in last year’s model, though then it was not alone. This year, only Idaho does much better in the published rankings than in the model.<br /><br />[Crossposted at <A HREF=http://agoraphilia.blogspot.com>Agoraphilia</A> and <A HREF=http://money-law.blogspot.com>MoneyLaw.</A>] </span>Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com0tag:blogger.com,1999:blog-3829599.post-78611394580399765732012-05-22T11:36:00.000-07:002012-05-22T11:52:12.356-07:00U.S. News & World Report Improves Transparency of Law School RankingsHuzzah for U.S. News and World Report! The most recent edition of its <a href="http://premium.usnews.com/best-graduate-schools/top-law-schools/law-rankings">law school rankings</a> includes the median LSAT and GPA of each school’s entering class. <em>Finally.</em> I have <a href="http://agoraphilia.blogspot.com/2006/08/reforming-usnwr-law-school-rankings.html">long argued</a> that USN&amp;WR should publish all of the data that it uses in its rankings. How else can the rest of us (read: rankings geeks) understand how—and, indeed, <em>whether</em>—the rankings work? Though USN&amp;WR remains short of that ideal, disclosing median LSATs and GPAs represents a major step towards making the rankings more transparent and, thus, trustworthy.<br /><br />USN&amp;WR started the trend towards transparency last year, when it began publishing the “volume and volume equivalents” measures that it uses in its law school rankings. That input counts for only .75% of a school’s score, however. Median LSATs and GPAs together count for 22.5% of a school’s score, in contrast, making their disclosure by USN&amp;WR all the more helpful.<br /><br />There remain only two categories of data that USN&amp;WR still uses in its law school rankings but does not disclose: overhead expenditures/student (worth 9.75% of a school’s score in the rankings) and financial aid expenditures/student (worth 1.5%). It isn’t evident why USN&amp;WR declines to publish those inputs, too, though perhaps the financial nature of the data raises special concerns. If USN&amp;WR cannot bring itself to publish overhead expenditures/student and financial aid expenditures/student, however, it should abandon those measures. They serve as poor proxies for the quality of a school’s legal education and if we cannot double-check the figures we cannot trust their accuracy.<br /><br />[Crossposted at <A HREF=http://agoraphilia.blogspot.com>Agoraphilia</A> and <A HREF=http://money-law.blogspot.com>MoneyLaw.</A>]Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com0tag:blogger.com,1999:blog-3829599.post-29930430065066627392012-05-15T11:14:00.000-07:002012-05-15T11:14:46.629-07:00Circular ReasoningFormer student Gabe Krupa, remembering a lecture I gave on the topic of misleading graphs and statistics, alerted me to <a href="http://mashable.com/2012/05/08/yahoos-fall-from-grace/">this graphic</a> showing the fall in Yahoo’s enterprise value. (I didn’t know the term enterprise value, but apparently it’s similar to market capitalization but with a few tweaks.)<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-iyrnCdG3bgc/T7KcIFA52gI/AAAAAAAAAPo/zutUFDc5rF0/s1600/yahoo_enterprise_value.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="221" src="http://1.bp.blogspot.com/-iyrnCdG3bgc/T7KcIFA52gI/AAAAAAAAAPo/zutUFDc5rF0/s320/yahoo_enterprise_value.jpg" width="320" /></a></div><br />As you can see, from 2006 to 2012, Yahoo’s enterprise value fell from $54.9 billion to $17.26 billion. The current value is just under a third of its value six years ago. But that big circle looks a lot more than three times larger than the small circle. In fact, it’s about ten times larger.<br /><br />As Gabe said in his email to me, the creators of this graphic used a 2/3 reduction in the <i>radius</i> of the circle when they should have used a 2/3 reduction in the <i>area</i>. Since the area of a circle increases with the square of the radius, the graphic drastically overstates the difference in value. (To be more specific, the small circle’s radius is about 31.4% of the big circle’s radius. The square of 0.314 is 0.098, meaning the small circle’s area is 9.8% of the big circle’s area.)<br /><br />This kind of error was highlighted in Darrell Huff’s <a href="http://www.amazon.com/How-Lie-Statistics-Darrell-Huff/dp/0393310728/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1337105386&amp;sr=1-1">How to Lie With Statistics</a>, first published in 1954. The bad news is that media sources still make the same error, whether purposely or accidentally, almost 60 years later. The good news is that apparently some students really do remember what they learned in class, even years later. My thanks to Gabe for bringing this example to my attention six years after taking my course.Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-3829599.post-85104988934146730112012-04-22T12:07:00.002-07:002012-04-22T12:33:57.242-07:00Wilkinson vs. Zwolinski on Voluntary Tax Contributions<a href="http://bleedingheartlibertarians.com/2012/04/want-higher-taxes-pay-them-yourself/">Matt Zwolinski offers an old chestnut libertarian argument</a>: that rich people like Warren Buffett, who advocate greater tax rates on people like themselves, should voluntarily give more money to the government. The fact that they don’t – as when Buffett donates <a href="http://news.bbc.co.uk/2/hi/5115920.stm">$37 billion</a> to the Gates Foundation instead of the government – indicates that they think their money is best spent elsewhere.<br /><br /><a href="http://bigthink.com/ideas/why-dont-people-voluntarily-pay-more-in-taxes/">Will Wilkinson thinks this is a bad argument</a>, because there’s obviously a collective action problem. It’s perfectly coherent for Buffett to say he would give more money <i>provided</i> that many others in his situation did the same, but that he doesn’t want to donate money unilaterally.<br /><br />I believe I can arbitrate this dispute. Whether Matt or Will is right turns on two questions: first, whether Buffett is assumed to be acting altruistically or selfishly; and second, what kind of collective action problem is involved.<br /><br />Let’s suppose the collective action problem is a form of prisoners’ dilemma. For simplicity, imagine two potential taxpayer/donors, Warren Buffett and Bill Gates. By contributing $100 to the government, each donor could generate benefits of $75 to both parties, for a total benefit of $150 when summed across the taxpayers. If both Buffett and Gates contributed, each of them would get a net benefit of $50 (that is, $75 from each contribution’s benefit, minus the $100 contribution cost). If neither contributed, each would get a net benefit of $0. If one contributed and the other did not, the non-contributor would get a net benefit of $75 (from the other guy’s contribution), and the contributor would suffer a net <i>loss</i> of $25 (that is, $75 from their contribution’s benefit minus $100 from its cost).<br /><br />To confirm this is a genuine prisoners’ dilemma, note that each party has a rational incentive not to contribute. Regardless of what the other guy is doing, any contribution creates only $75 of personal benefit and $100 of personal cost. Non-contribution is a dominant strategy. And yet both Gates and Buffett would be better off if both contributed, since $50 net benefit (from both contributing) is better than $0 net benefit (from neither contributing).<br /><br />So this would seem to support Will’s position: it’s sensible to refuse to contribute unless you know that both parties will be forced to do so. But here’s where altruism versus selfishness comes in. The reasoning above depends on the two parties acting on rational self-interest. But if they were reasoning based on an altruistic utilitarian calculus, they would each contribute <i>regardless</i> of what the other guy was doing. A $100 contribution generates a $150 total gain, and that’s enough to justify the contribution. And this, I believe, is Matt’s whole point. Buffett at least claims to be taking an altruistic position – and his actual charitable contributions lend support to that claim. If so, he should be giving more money to the feds if he actually believes doing so will generate the greater altruistic bang for his buck.<br /><br />On the other hand, let’s suppose the collective action problem is more of a coordination game. Imagine that a $100 contribution from one donor really won’t do any good at all – it will just be wasted. But <i>two</i> $100 contributions will generate a benefit of $150 each. The benefit only occurs when both parties act together in a coordinated fashion. In this situation, it doesn’t make sense to contribute at all unless the other party does so as well – and this is true <i>regardless of whether you’re selfish or altruistic</i>.<br /><br />If the real-world situation is more like a coordination game, then Will’s position looks stronger. Even as an altruist, Buffett is correct to withhold his contribution to the government until he’s sure the government will make sure Gates (and others) contribute as well. To put it differently, it makes sense to withhold contributions if there’s a kind of non-linearity in the impact of contributions, so that twice as much money creates more than twice as much benefit. (The structure of my coordination game does this in extreme fashion by asserting that the lone contribution has zero benefit.)<br /><br />So which is it? Is the real-world situation vis-à-vis the federal deficit more like a prisoner’s dilemma or a coordination game? On this question, I don’t have a strong opinion, but my instinct is that it’s more like the former. Why? Because I suspect there’s no real non-linearity in the impact of deficit reduction on social benefits. A $100 reduction in the deficit surely has a negligible impact on any macroeconomic variable, but it’s only negligible because $100 is not much money, not because $1000 is <i>more</i> than ten times as effective as $100. In other words, we shouldn’t confuse “small impact because of small contributions” with “small impact because of coordination failure.” From an altruistic utilitarian perspective, only the latter should affect your decision to contribute. However, since I’m not a macroeconomist, I’m open to the idea that there are non-linearities here that I’m not recognizing.<br /><br />UPDATE:&nbsp; <a href="http://econlog.econlib.org/archives/2012/04/voluntary_taxes.html">Arnold Kling</a> makes essentially the same point about non-linearity; as he puts it, Will's position seems to require "some extreme 'lumpiness' of public goods."Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-3829599.post-26017645847739000202012-01-10T13:12:00.000-08:002012-01-10T13:17:26.984-08:00Are STEM Degrees Already Subsidized More?Alex Tabarrok argues in his ebook, <a href=http://www.amazon.com/Launching-Innovation-Renaissance-Market-ebook/dp/B006C1HX24/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1326227144&sr=1-1>Launching the Innovation Renaissance</a>, that graduates with STEM (science, technology, engineering, math) degrees are more likely to create innovations that benefit the rest of society – and therefore they are relatively more deserving of educational subsidies than students in other disciplines. Here’s how Alex <a href=http://marginalrevolution.com/marginalrevolution/2011/11/college-has-been-oversold.html>puts it</a>: <blockquote>Most importantly, graduates in the arts, psychology and journalism are less likely to create the kinds of innovations that drive economic growth. Economic growth is not a magic totem to which all else must bow, but it is one of the main reasons we subsidize higher education.<br /><br />The potential wage gains for college graduates go to the graduates — that’s reason enough for students to pursue a college education. We add subsidies to the mix, however, because we believe that education has positive spillover benefits that flow to society. One of the biggest of these benefits is the increase in innovation that highly educated workers theoretically bring to the economy.<br /><br />As a result, an argument can be made for subsidizing students in fields with potentially large spillovers, such as microbiology, chemical engineering, nuclear physics and computer science. There is little justification for subsidizing sociology, dance and English majors.</blockquote>I think Alex is right; if we’re going to subsidize education, we should subsidize education that generates external benefits for society at large.<br /><br />But I’m wondering if, in fact, we might <em>already</em> subsidize STEM degrees more than other degrees. Consider the following three factors that make STEM courses more costly to teach:<br /><br />1. STEM professors are typically paid higher salaries. See, for example, <a href=http://chronicle.com/article/Faculty-Salaries-Vary-by/127073>this report</a> from the Chronicle of Higher Education. The last table shows salaries by discipline, as a percentage of the average salary of English professors. Across all disciplines, the average salary is 13.4% higher than an English professor’s. But Engineering professors earn 25.2% more, Computer & Information Sciences 28.4% more. Mathematics is below average at 7.2%, but overall, STEM professors appear to get paid a good bit more than the average. Meanwhile, Fine Arts, Education, Communications, Philosophy, and Psychology are all below the average. (This makes sense, because STEM professors probably have better outside job opportunities and thus a higher opportunity cost.) <br /><br />2. It’s easier to teach non-STEM courses in large lecture halls, whereas STEM courses often require smaller class sizes to be taught effectively. (I don’t know this with certainty, but I’ve been told as much by university administrators.)<br /><br />3. When STEM courses are taught in large lecture halls, they require a larger number of teaching assistants to give the students the attention they need. (Again, I don’t know this with certainty, but it’s what I’ve been told.)<br /><br />Putting 1-3 together, it seems pretty likely that STEM education is more costly to produce. And yet colleges and universities typically charge all students <em>the same tuition</em> regardless of major. True, STEM students may be charged nominal lab fees, but I doubt such fees make a large difference in percentage terms. <br /><br />So when we consider how much students are charged <em>relative to cost</em>, it looks like STEM students might be getting the larger subsidy. Of course, I don’t know how high the optimal subsidy would be, so it’s possible the current subsidy isn’t large enough.<br /><br />It’s also worth noting that professors in Law and Business Administration earn the highest pay differentials of all (59.5% and 50.9% above the average English professor), which would imply that these fields are getting among the highest relative subsidies. Econ professors also earn a high differential of 41.2%. Again, this is presumably driven by outside job opportunities. Unless we believe Law, Business Admin, and Econ generate strong positive externalities, maybe we should be charging students more to major in those fields.<br /><br />Is there some factor I’m missing that would diminish the relative subsidy to STEM (or at least STE) degrees?Unknownnoreply@blogger.com19tag:blogger.com,1999:blog-3829599.post-47930926379424201812011-10-17T20:04:00.000-07:002011-10-17T20:23:51.791-07:00Quartering: A Forbidden M&M in the Bowl of RightsMy most recent paper, <EM><A HREF=http://ssrn.com/abstract=1944647>“Property” in the Constitution: The View from the Third Amendment,</A></EM> 20 <STRONG>William & Mary Bill of Rights J.</STRONG> __ (2012) (forthcoming), explains how one of the most obscure provisions in the Constitution can help to clarify one of its most important terms. I may have more to say about that more general point later. Here, I want to highlight a connection between the 3rd Amendment’s restrictions on the quartering of troops in private homes and <A HREF=http://en.wikipedia.org/wiki/Van_Halen>the rock band</A> famous for such hits as <EM>Running with the Devil,</EM> <EM>Panama,</EM> and <EM>Jump.</EM><br /><br />In the grand struggle to protect individual rights against government trespass, the Third Amendment plays a role akin to <A HREF=http://www.thesmokinggun.com/file/van-halens-legendary-mms-rider?page=8>the provision,</A> in Van Halen’s standard performance contract, requiring a bowl of M&Ms in band’s hospitality room with all the brown ones removed. Though sometimes touted as an example of rock star excess, the clause in fact served to test whether the band’s contractual partner, providing the concert venue, had read the terms of their agreement. Finding brown M&Ms backstage <A HREF=http://www.snopes.com/music/artists/vanhalen.asp>warned Van Halen</A> to look out for more serious breaches, such as in the contract’s provisions on wiring, security, and ticketing.<br /><br />Quartering serves as a forbidden M&M in the Constitution’s bowl of rights and violations of the Third Amendment signal more serious problems. Consider that the Third Amendment <A HREF=http://www.tomwbell.com/writings/3rd.html#HIII.A>saw violation</A> during the War of 1812, the Civil War, World War II, a 1979 New York prison guard strike, and Hurricane Katrina. Consider, and worry.Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com0tag:blogger.com,1999:blog-3829599.post-32244761387072135182011-10-15T10:47:00.000-07:002011-10-15T14:54:16.888-07:00U.S. Supreme Court: “Private” = “Public”What does “private” mean in the U.S. Constitution? The word appears there only once, in the Fifth Amendment’s Taking Clause: “[N]or shall private property be taken for public use, without just compensation.” You might think that “private” means something like “not owned by the government.” The Supreme Court, however, evidently thinks it means something else.<br /><br />My most recent paper, <EM><A HREF=http://ssrn.com/abstract=1944647>“Property” in the Constitution: The View from the Third Amendment,</A></EM> 20 <STRONG>William & Mary Bill of Rights J.</STRONG> __ (2012) (forthcoming; invited), discusses that and other linguistic perversions, all towards demonstrating that courts would do better to adopt the plain, present, public meaning of the text. Here, edited for your browsing pleasure, I describe the Supreme Court’s twisted interpretation of “private” in the Takings Clause.<br /><br />In <EM>U.S. v. 50 Acres of Land,</EM> 469 U.S. 24 (1984), the Supreme Court held that the Takings Clause’s protection of “private Property” covers property owned by state and local governments. The Court admitted that “the language of the Amendment only refers to compensation for ‘private property,’ and one might argue that the Framers intended to provide greater protection for the interests of private parties than for public condemnees.” <EM>Id.</EM> at 31. The Court nonetheless went on to hold that “private” includes “public”:<br /><br /><BLOCKQUOTE>When the United States condemns a local public facility, the loss to the public entity, to the persons served by it, and to the local taxpayers may be no less acute than the loss in a taking of private property. Therefore, it is most reasonable to construe the reference to ‘private property’ in the Takings Clause of the Fifth Amendment as encompassing the property of state and local governments when it is condemned by the United States. <EM>ibid.</EM></BLOCKQUOTE><br />We might well doubt the Court’s logic in equating inter-governmental transfers with takings of private property, as well as the truth of the claim that a taxpayer feels the loss of local public property as keenly as the loss of a home. We might likewise doubt the <EM>50 Acres</EM> court’s invocation of <EM>U.S. v. Carmack,</EM>329 U.S. 230 (1946), a case the Court had decided nearly 40 years earlier. In fact, the Court in <EM>Carmack</EM> merely took note that the federal government had conceded its obligation to pay for taking locally-owned public property. Because the parties did not contest the claim, <EM>Carmack</EM> could hardly have decided it. The Court in <EM>50 Acres of Land</EM> thus had only itself to credit or blame for giving “private” an extraordinarily broad meaning.<br /><br />In retrospect, following the controversial holding of <EM>Kelo v. City of New London,</EM> 545 U.S. 469 (2005), we can see a sort of perverse logic at work in how the Supreme Court reads the Takings Clause. Whereas the Court in <EM>50 Acres</EM> held that the protections afforded to “private Property” extend to public property, the Court in <EM>Kelo</EM> held that “for public use” extends to takings for private use done “pursuant to a ‘carefully considered’ development plan.” <EM>Id.</EM> at 478 (quoting 268 Conn. 1, 54, 843 A.2d 500, 536 (2004)).<br /><br />Just as the Supreme Court thinks that “private” includes “public,” in other words, it also thinks that “public” includes “private.”Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com4tag:blogger.com,1999:blog-3829599.post-53214994140664375902011-10-11T19:18:00.000-07:002011-10-13T07:43:36.552-07:00Pan Am and the Economics of Hot Flight AttendantsA quick break from the economics of Aesop, so I can talk about the economics of ABC’s <em>Pan Am</em> before it <a href=http://tvbythenumbers.zap2it.com/2011/10/11/abc-mayday-pan-am-descends-toward-cancellation/106745/>gets canceled</a>. Not that I want it to get canceled; I watched the pilot and liked it. But the Nielsen numbers say I should speak now while it’s still topical...<br /><br />For an economist, the most fascinating aspect of <em>Pan Am</em> is the highly attractive flight attendants -- or rather, stewardesses, since the show is set in the early 1960s. If you’re young enough, you might think that’s just TV. But I’m just old enough to remember flying in the 1970s, and I recall stewardesses who really were, in fact, hot. Okay, I was too young to understand the concept of “hot” -- but I was definitely aware that I was being attended by some very pretty young women.<br /><br />Not so anymore. Flight attendants aren’t necessarily <em>unattractive</em> now, but they’re no more fetching than people in any other service profession that doesn’t get tips. And what’s changed? In a word, <em>deregulation</em>. <br /><br />Prior to airline deregulation, which was passed in 1978 and completed over the next few years, airfares had been set by the Civil Aeronautics Board (CAB). For many routes, those airfares were simply too high. As predicted by a simple supply-and-demand model, airlines were willing to offer more flights at these high prices than customers were willing to buy. Under normal market conditions, that would lead to falling prices. But since the airlines legally could not compete on price, they competed on quality instead. They offered better service, better food, and... wait for it... more attractive stewardesses.<br /><br />When deregulation came along, however, it became apparent that as much as male customers might have enjoyed the eye candy, they weren’t willing to pay for it. Higher quality might seem like a good thing, but it’s really only good if the benefit exceeds the cost. More attractive staff can command higher wages. The airlines could have continued to pay them, if the higher quality had attracted more customers. But as it turns out, most people just wanted to get where they were going, fast and cheap. Deregulation fueled a democratization of air travel, making what once was a luxury item available to nearly everyone. The number of people who fly at least once a year has <a href=http://www.econlib.org/library/Enc/AirlineDeregulation.html>more than doubled</a> since 1978, while the population has grown by about 40%. These new customers have flocked to the airlines with no-frills or low-frills service, a trend that continues to this day (JetBlue, anyone?).<br /><br />And y’know what? That’s a good thing, yet another efficiency gain from deregulation. There are plenty of other ways to see attractive women.Unknownnoreply@blogger.com37tag:blogger.com,1999:blog-3829599.post-82375940383418388742011-09-21T15:02:00.000-07:002011-09-21T15:14:39.435-07:00Aesop Econ: The Grasshopper and the AntsHere’s one I remember from childhood:<blockquote>THE ANTS were spending a fine winter’s day drying grain collected in the summertime. A Grasshopper, perishing with famine, passed by and earnestly begged for a little food. The Ants inquired of him, “Why did you not treasure up food during the summer?” He replied, “I had not leisure enough. I passed the days in singing.” They then said in derision: “If you were foolish enough to sing all the summer, you must dance supperless to bed in the winter.”</blockquote>Wow. There’s so much econ in this fable it’s hard to know where to start.<br /><br />Obviously, we’re looking at a problem of <em>intertemporal choice</em>. The insects must decide how much effort to exert during an earlier period (summer) to prepare for a later period (winter). Exerting effort entails a present cost in terms of forgone leisure, but a future benefit in terms of consumption. The optimal choice depends on the magnitude of the subjective costs and benefits, as well as the chooser’s rate of time preference -- that is, how much he values the present relative to the future.<br /><br />To a behavioral economist, the fable involves <em>myopia</em> or <em>hyperbolic discounting</em>. To simplify greatly, the grasshopper places too much weight on the present simply because it’s the present. If asked during the spring to choose his summer behavior, the grasshopper might plan to work harder. But then the lazy days of summer arrive, and suddenly he decides to kick back. This is known as time inconsistency, and it is often regarded as evidence of cognitive bias or irrationality.<br /><br />To a neoclassical economist, however, this is clearly a fable about <em>moral hazard</em> -- the tendency to take greater risks when shielded against the consequences. No one knows whether the coming winter will be mild or harsh, and so they must choose between storing up food or taking a gamble. The grasshopper’s failure to work during summer might well be a rational response to the expected assistance of others in the event of a harsh winter.<br /><br />And this raises the specter of the <em>Samaritan’s Dilemma</em>. People of a kind and decent disposition don’t wish to allow others to suffer, especially if helping them would be a small sacrifice. But providing charity may foment moral hazard, thereby leading to more people needing help.<br /><br />The Samaritan’s Dilemma featured prominently in the most recent <a href=http://archives.cnn.com/TRANSCRIPTS/1109/12/se.06.html >Republican presidential debate</a>, in which Wolf Blitzer posed a tough question to Ron Paul:<blockquote>A healthy 30-year-old young man has a good job, makes a good living, but decides: “You know what? I’m not going to spend $200 or $300 a month for health insurance because I’m healthy, I don’t need it.” But something terrible happens all of a sudden, he needs it. Who’s going to pay if he goes into a coma, for example? Who pays for that?</blockquote>This 30-year-old man is the grasshopper, and we are the ants. Aesop’s ants take the position of Ron Paul: “Well, in a society that you [sic] accept welfarism and socialism, he expects the government to take care of him. … But what he should do is whatever he wants to do, and assume responsibility for himself.” I find it interesting that so many people -- who presumably heard this fable in their childhood and thought it wise – found Paul’s answer reprehensible.<br /><br />Paul also advocated private charity as an alternative to government. Yet private charity, too, creates the potential for free-riding by the irresponsible. So there is a tension in Paul’s position. <a href=http://healthblog.ncpa.org/answering-wolf-blitzer/ >John Goodman</a> explains how the tension can be resolved:<blockquote>[P]rivate sector charitable activities are <a href=http://www.ncpa.org/pdfs/st123.pdf>never run like government entitlements</a>. If you are away from home and lose your wallet, the local Salvation Army will give you a meal and a place to sleep and maybe even some cash. But they will not do this day after day, night after night. It’s probably fair to say that all private charities seek to give aid without encouraging dependency.</blockquote>Aesop’s ants follow a similar policy; they do not refuse the grasshopper aid outright, but instead inquire as to how the grasshopper’s situation arose. Of course, charitable discretion is not a perfect answer. There is always the risk of denying help to the deserving, and also the risk of giving help to the undeserving (what if the grasshopper had lied?). But if you grasp the Samaritan’s Dilemma, you realize there is no perfect answer; that’s why it’s called a dilemma.Unknownnoreply@blogger.com11tag:blogger.com,1999:blog-3829599.post-18766159931664227532011-09-14T10:14:00.000-07:002011-09-14T10:26:53.470-07:00Aesop Econ: Hercules and the Wagoner<blockquote>A CARTER was driving a wagon along a country lane, when the wheels sank down deep into a rut. The rustic driver, stupefied and aghast, stood looking at the wagon, and did nothing but utter loud cries to Hercules to come and help him. Hercules, it is said, appeared and thus addressed him: “Put your shoulders to the wheels, my man. Goad on your bullocks, and never more pray to me for help, until you have done your best to help yourself, or depend upon it you will henceforth pray in vain.”<br /><br />Self-help is the best help.</blockquote>This might be a story of simple laziness (or in economic terms, a strong preference for leisure over effort). But here’s what I wonder: what made the carter think Hercules might come and help? What led to such an odd expectation? I suspect the carter, or people he knows, must have tried this strategy before -- and with success. Hercules’ words lend some support to this hypothesis: never <em>more</em> pray for help without first trying yourself, or <em>henceforth</em> pray in vain. Though it’s not entirely clear, it sounds like Hercules might be known for lending a hand in situations like this.<br /><br />For that reason, I read this as a story about <em>disincentives to work</em>. Such disincentives come in four primary forms: punishments for working; reduced rewards for working; rewards for not working; and reduced punishments for not working. The last of these is what’s in play here. Knowing that help from Herc is forthcoming, people become less inclined to exert effort themselves.<br /><br />Work disincentives are a common topic in current policy debates. One example is unemployment insurance. The purpose of such insurance is to help those who cannot find jobs. The worry is that unemployment payments discourage people from seeking and taking jobs. Of course, the claim is not that <em>all</em> unemployed people, or even a great number of them, fall into this category -- only that some unknown number do. (I personally know at least three people who fit the bill and have told me so.) And then the question is whether the gain from helping those who genuinely need help outweighs the loss from those who don’t.<br /><br />Getting back to Hercules, the question is what policy he should adopt. If he helps everyone who seems to need help, he will encourage dependency by some. If he refuses to help anyone, then some poor souls may be stuck in ruts indefinitely. So Hercules adopts the intermediate policy of demanding people try self-help first before begging his assistance. And then the question will become: how many of those he helps are <em>really</em> trying?Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3829599.post-75467595363627754652011-09-09T18:31:00.000-07:002011-09-12T10:01:04.874-07:00Aesop Econ: The Two Dogs<blockquote>A MAN had two dogs: a Hound, trained to assist him in his sports, and a Housedog, taught to watch the house. When he returned home after a good day’s sport, he always gave the Housedog a large share of his spoil. The Hound, feeling much aggrieved at this, reproached his companion, saying, “It is very hard to have all this labor, while you, who do not assist in the chase, luxuriate on the fruits of my exertions.” The Housedog replied, “Do not blame me, my friend, but find fault with the master, who has not taught me to labor, but to depend for subsistence on the labor of others.”<br /><br />Children are not to be blamed for the faults of their parents.</blockquote>Aesop takes this for a story about parental duty, but I see a story about specialization according to comparative advantage.<br /><br />Both hunting and house-watching are valuable activities. Now, it may well be that the Hound could guard the house as well as the Housedog. But that doesn’t mean the Housedog is useless. On the contrary, his presence allows the Hound more time to go hunting, thereby increasing the household’s overall productivity. <br /><br />Imagine what would happen if the Hound and Housedog split their time between the two activities, perhaps by swapping places at lunch. Suppose the Hound can catch ten game birds per day versus the Housedog’s four, and they are equally good at guarding the house. By splitting their time, they would catch a total of seven birds per day, i.e., five from the Hound’s half-day plus two from the Housedog’s half-day. But by specializing according to their respective comparative advantages (the Hound in hunting, the Housedog in guarding), they get ten birds, for a gain of three. The Housedog enables that gain by guarding the house; does he not also deserve a share of the spoils?Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-3829599.post-7952051862980623082011-09-06T12:25:00.000-07:002011-09-11T13:22:37.425-07:00Aesop Econ: The Charcoal-Burner and the FullerMy Amazon Kindle app came with a free copy of Aesop’s Fables (translation by George Fyler Townsend), which I began reading a few days ago. Aside from being charmed by their brevity and deceptive simplicity, I was also struck by how many of the stories involved economic concepts -- some obviously, others subtly. So I thought it might be fun to do a series of blog posts analyzing Aesop’s Fables from an economic perspective.<br /><br />To start, here’s a fable called “The Charcoal-Burner and the Fuller.”<blockquote>A CHARCOAL-BURNER carried on his trade in his own house. One day he met a friend, a Fuller, and entreated him to come and live with him, saying that they should be far better neighbors and that their housekeeping expenses would be lessened. The Fuller replied, “The arrangement is impossible as far as I am concerned, for whatever I should whiten, you would immediately blacken again with your charcoal.”<br /><br />Like will draw like.</blockquote>This is a story about <em>negative externalities</em>. Were the charcoal-burner and fuller to move in together, the charcoal-burner’s trade would impose unwanted costs on the fuller’s. How might this problem be addressed?<br /><br />In a traditional Pigovian analysis of the situation, the coal-burning’s harmful side effects might be regarded as justifying a correction. Perhaps the government ought to impose a tax on burning charcoal; the optimal tax would be set equal to the marginal external cost in terms of blackened garments. That would induce the charcoal-burner to consider the full costs of his choices, and therefore to reduce his charcoal-burning to the efficient level.<br /><br />But Aesop’s story presages a more sophisticated Coasean analysis. As Ronald Coase observed, externalities are <em>reciprocal</em> in nature. To permit the burning of coal would harm the fuller -- but to restrict the burning of coal would harm the coal-burner. The presence of <em>both</em> activities is necessary for the externality to exist. And this draws our attention to the possibility of averting the harm by means other than reducing coal-burning. According to the <em>least-cost avoider principle</em>, an externality should be reduced or prevented by the party who can do so at the lowest cost. In the case at hand, the fuller can avoid the externality by <em>not moving in with the charcoal-burner in the first place</em>. <br /><br />In most modern externality analysis, the story begins with two parties or activities that are already in conflict. But Aesop properly chooses to start his story before the conflict comes to be. Moreover, Aesop (like Coase) reminds us that externality problems can, at least sometimes, be solved or avoided by the interested parties themselves.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3829599.post-80444469675716947272011-09-02T08:18:00.000-07:002011-09-02T08:28:44.392-07:00What is Originalism Good For?Originalism--the theory that we should Interpret the Constitution according to the public meaning of its words at the time of its ratification--serves important instrumental goals. It promises to give relatively clear and objective definitions to crucial but contestable terms, such as “cruel and unusual” or “due process of law,” by recurring to the linguistic usage of those who ratified the Constitution. That interpretive process, though hardly easy, at least protects us from the sort of judicial casuistry that threatens to drain all fixed meaning from the Constitution’s words.
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<br />To praise originalism for relative certainty and objectivity is not to say that its definitions always comport with our own, however, or that they hold constant from one place in the Constitution to another. Consider “cruel and unusual,” for instance. So long as they do not lapse into what Scalia called a “faint-hearted” devotion to principle, originalists must admit that it is not unconstitutional to publicly flog or brand criminals. Originalism thus gives us a very clear answer, and one untainted by any contemporary bias (indeed, entirely divorced from modern sensibilities), to the question of what “cruel and unusual” means. It may not be quite the answer the average person—or the average criminal—expects, but originalism does not pretend to play to the crowd.
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<br />Nor does originalism, despite its certainty and objectivity, always give words consistent interpretations. In the case of “due process of law,” for instance, originalism suggests that a different meaning applies each of the two times the phrase appears in the Constitution. Why? Because each such appearance dates from a different ratification process, in a different era, in which <A HREF=http://originalismblog.typepad.com/the-originalism-blog/2011/08/substantive-due-process-part-ii-ryan-williamss-basic-argumentmike-rappaport.htm>“due process of law” meant different things.</A> Perhaps it would not be fair to thereby criticize originalism for inconsistency on that count; the same interpretative process applies to each appearance of “due process,” after all. But it does drive home the point that originalism does not care about reading the Constitution in the same way that an ordinary subject, using ordinary English, would read it today.
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<br />Originalism has another instrumental virtue: It tends to generate such substantively attractive results as limited government, the rule of law, and respect for individual rights. For that, we can credit not just the sound political judgments of the Founders but also, and more generally, the supermajoritarian constraints imposed on Constitutional ratification. Because the ratification process has to satisfy so many parties, who have many conflicting interests, the Constitution and its amendments tend to support universal values. Contemporary judges, because they do not face those similar constraints, risk following the twists and turns of case law toward unlimited government, arbitrary laws, and disregard for individual rights. Originalism, by recurring to the Constitutional meanings that won ratification, offers a way (though not the only or necessarily best way) to stave off that ugly outcome.
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<br />[The above comes from my forthcoming paper, <EM>Originalism and the Consent of the Governed: A Critique and a Cure,</EM> which I’ve submitted for presentation at the <A HREF=http://www.sandiego.edu/law/news/calendar_of_events/event_details.php?_focus=39139>Third Annual Originalism Works in Progress Conference.</A>]
<br />Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com2tag:blogger.com,1999:blog-3829599.post-33733629336660302152011-08-12T14:29:00.000-07:002011-08-12T14:45:56.462-07:00Volokh on the Constitution's Plain, Present, Public MeaningMy friend, Eugene Volokh, has posted <A HREF=http://volokh.com/2011/08/12/interpreting-the-constitution-according-to-its-plain-present-public-meaning/>some thoughtful comments</A> on my consent-based approach to reading the Constitution. His excellent questions show one benefit of looking for the plain, present, public meaning of the Constitution: It gives us a fresh look at a document we risk treating as putty for judges or as a dead historical artifact.
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<br />I won't pretend that a consent-based approach to reading the Constitution solves all our interpretive problems--especially hard problems like those Eugene raises--but every theory struggles with the text. Looking for the plain, present, public meaning of the Constitution offers at least another way to tackle the problem. I'd argue, further, that it offers us the best way to maximize the consent of the governed.
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<br />Eugene cites a "number of terms that either don’t have a 'plain, present, public meaning' apart from either their originalist or precedential meaning," such as those in the First Amendment or other, well-known parts of the Constitution. I appreciate that observation--though again I emphasize that precedent-based "living" constitutionalists and originalists struggle with the same passages. I won't bother, here, to try to answer each puzzle that Eugene offers, as I am more interested in describing a methodology than I am in dictating particular results. I have opinions about such things, to be sure, but I'm no judge.
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<br />How should real-world judges interpret constitutional words or phrases that the public understands to have a specialized meaning (e.g., "establishment of religion") or no discernible meaning at all (e.g., "writ of habeas corpus")? The same way they would interpret and construct a contract in similar circumstances: interpreting legal terms as such, taking heed of their context, and constructing uncertainties against the drafting party (the U.S. federal government, here) and in favor of the adhering party (citizens and residents of the U.S.).
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<br />That does not lead to simply following Supreme Court precedents. I doubt that <EM>Kelo</EM> would come out the same way under that approach, for instance, nor that "Property" would end up with a different meaning each time it appears in the Constitution. Note, too, that the approach I describe leaves room for considering original meaning, which we should treat as something akin to "course of dealing" in the contract context. By borrowing the methodologies of contract law, a court can come as close as possible to finding the plain, present, public meaning of popularized constitutional phrases and uncommon terms such as "writ of habeas corpus." Perfection remains elusive, here as with other approaches to the Constitution. But this approach offers the best guarantee of preserving the consent of the governed.Tom W. Bellhttp://www.blogger.com/profile/02790351458154066358noreply@blogger.com3